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The Biggest Losers From Cord-Cutting So Far

These two media companies have lost the most subscribers.

Pay-TV companies have been responding to cord-cutters the best they can. While many customers are still ditching their video packages, others are simply opting for smaller and less expensive bundles of networks. These skinny bundles can have even more detrimental effects on media companies, as subscriber losses for some networks drastically outnumber the number of people cutting ties with cable altogether.

By far the two biggest losers from cord-cutting and cord-shaving are Disney's (NYSE:DIS) ESPN and Viacom's (NASDAQ:VIA) family of networks. ESPN and ESPN2 are both in the top five networks with the most subscriber losses between 2011 and 2015, according to Ampere Analysis. Meanwhile, Viacom owns five of the top 10 subscriber losers.

Here's what both of them are doing to combat and offset subscriber losses.

Getting ESPN in the skinny bundle

ESPN lost 7 million subscribers between 2013 and 2015. Many analysts expect that trend to continue this year. At the end of last year, Disney CEO Bob Iger recognized that much of the losses are coming from subscribers switching to skinny bundles. As such, he's made more efforts to include his networks in the smaller bundles.

Specifically, Disney worked closely with DISH Network to launch Sling TV with ESPN's channels. As more digital television distributors come online, Disney expects its networks to be part of the lowest-paid tier they offer. During its third-quarter earnings call, Disney announced that ESPN will be part of both DirecTV Now subscription tiers when AT&T launches the digital service later this year.

Viacom can't raise rates fast enough

Viacom is as close as it gets to a pure-play cable network operator, and cord-cutting hasn't been kind to it. Data from Ampere Analysis shows that Spike TV, MTV, VH1, Nickelodeon, and CMT have all lost over 6 million subscribers since 2011.

More importantly, Viacom saw its affiliate fee revenue decline 8% last quarter and 4% through the first nine months of 2016. Near the end of the second quarter, then-CEO Philippe Dauman indicated that the worst was over, noting that Viacom recently signed deals with DISH Network and Cox Cable "on attractive terms" in the low- to mid-single-digit range.

However, the company was unable to renew an SVOD deal, which more than offset the benefits of its renewals with traditional distributors. Even with the expectation that it will renew the deal by the end of the year, Viacom still expects overall affiliate revenue to decline for the full year.

That stands in stark contrast to Disney, which was able to increase affiliate revenue from its media networks segment by 5% in the third quarter. Growth in its broadcast networks led the way, but cable network affiliate revenue still increased 3.5% despite subscriber losses.

Going over the top

Both Viacom and Disney are experimenting with over-the-top services. Viacom launched its Nickelodeon-branded Noggin streaming service last year to bring its kids' programming into more households. Disney, meanwhile, launched its DisneyLife service to stream movies, TV, and music in Europe at the end of 2015.

Disney is taking further steps to get into digital streaming. It bought a one-third stake in BAMTech earlier this year. BAMTech provides the technology behind popular streaming services such as HBO Go and Disney's own WatchESPN. The company plans to launch an ESPN-branded streaming service in the future to complement its linear television networks.

The big difference between ESPN and Viacom

The problem Viacom currently faces is that none of its networks have a hit program -- especially since Jon Stewart left The Daily Show. Its channels fill out the bundle without providing much value other than something to watch when nothing is on TV -- and those instances are more often filled by SVOD services these days.

ESPN, by comparison, has the rights to several must-see events for sports fans, such as Monday Night Football and the NBA Finals. It also produces compelling sports documentaries.

ESPN's programming gives it the capability to demand higher affiliate fees or succeed as a stand-alone over-the-top service. Viacom's lack of superior programming enables distributors to offer a skinnier bundle without subscriber complaint. As such, Disney is a much more attractive investment at the moment than Viacom.

Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Adam has been writing for The Motley Fool since 2012 covering consumer goods and technology companies. He consumes copious cups of coffee, and he loves alliteration. He spends about as much time thinking about Facebook and Twitter's businesses as he does using their products. For some lighthearted stock commentary and occasional St. Louis Cardinals mania ... Follow @admlvy